Amazon's web services - the big reveal

Today Amazon publishes separate figures for its public cloud services. This will change a lot of things

April 23, 2015

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Every corporation has its own version of The American Dream. For Microsoft it was to have a personal computer on every business desktop. For Apple it was to sell the most stylish user experience. For Amazon Web Services the dream is to replace all traditional corporate compute with a simple diner menu card all businesses can order computing power from for all their needs. We may see some movement to realise that dream today as it reveals it’s latest financials.

Amazon’s dream is working. It has become the leader in public cloud, way ahead of the competitors. And yet, it has never revealed the revenye figures for AWS, bundling it into its overall corporate finances.

Today this changes, as Amazon finally reveals separate figures for its AWS business.

In doing this, Amazon has a difficult balancing act to pull off. It has to make the AWS figure good while not eclipsing the figures from Amazon’s main retail business. Profitability is key.

The market expects Amazon to report revenue of $22.39 bn in the quarter, up 13.4 percent year-on-year from $19.74 bn.

Amazon is the top public cloud platform, according to a bunch of highly variable estimates. Amazon is given 50 percent market share by market site Seeking Alpha, in a set of figures where Rackspace trails with 8 percent market share, followed by Microsoft (6 percent), Verizon and IBM (3 percent each). Other vendors combined (presumably including Google) make up about 30 percent market share. AWS also offers the cloud sector’s lowest prices.

If the business case for AWS is just cost…

The business case so far

If it boils down to cost, it’s a simple business case

According to Seeking Alpha: “Amazon, widely seen as having a feature set lead over cloud infrastructure rivals, had 2014 “Other” revenue (AWS-dominated) of $5.6Bn (+42% Y/Y). AWS revenue will be broken out by itself starting with Amazon’s Q1 report.”

Amazon has been innovating and introducing new products. Lambda, which automatically runs code in response to events, and the EC2 Container Service, a management service for Docker containers, are now generally available. Amazon, is generally seen as having a feature-rich lead over its cloud rivals, had 2014 “Other” revenue (AWS-dominated) of $5.6B (+42% Y/Y). AWS revenue will be broken out by itself starting with Amazon’s Q1 report due out today.

AWS has also made the following recent launches: Aurora (an enterprise-class database), Zocalo (a cloud storage/file-sharing platform for corporate users) and WorkMail (a cloud corporate e-mail platform) which should prove an interesting comparison for Google partners, particularly VMware which has struck a deal with Google to offer a slew of Google services through its vCloud Air platform. Specifically, Google’s Cloud Storage service, BigQuery business intelligence query service, Cloud Datastore NoSQL (unstructured) database service, and Cloud DNS domain name service.

It makes sense for Amazon to be offering up some details about such a key business unit. But why break out the numbers now? Simple – it said in its last analyst call in January that the business is growing fast enough to make it the right time to do so.

However, it may be planning to spin off AWS separately, since it is a completely different beast from the retail business.